Frost: Innovation Spurs North American Air Traffic Management Markets
June 21, 2006
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The adoption of revolutionary
air traffic management (ATM) concepts, such as satellite navigation, digital communications, datalinks and
automatic dependent surveillance-broadcast (ADS-B) will primarily drive growth in the North American ATM markets, according to Frost & Sullivan. Although the markets are unlikely to sustain growth momentum until 2014, analysts said their substantial value and revenue potential will attract new participants - including non-regional vendors - despite significant entry barriers.
Recent analysis from Frost & Sullivan found that the North American air traffic management markets earned revenues of $1.2B in 2005. "The North American aviation industry is finally recovering, following the events of 9/11," said Frost & Sullivan consulting analyst Georgios Oikonomakis. "During the next 10 years, North America will witness the realization of innovative ATM concepts, such as satellite navigation and ADS-B, that are transforming civil aviation, as well as the dynamics of the ATM markets."
North America has been among the earliest adopters of digital air-ground communications, satellite navigation based on global positioning systems (GPS) and ADS-B. Such initiatives will drive revenues in the communications navigation and surveillance segments in the future, analysts said.
However, regional competitors still dominate the North American ATM markets due to historic contract allocations. This trend is projected to continue, as the North American industry is more than capable of meeting the regions' needs. Still, analysts said reduced funding capabilities and its program-driven, cyclic nature will make it difficult for the market to achieve a sustainable growth rate.
"In this competitive environment with its significant entry barriers, product differentiation will be highly irrelevant," said Oikonomakis. "Instead, the way to secure contracts will be through partnerships with North American industry giants that will remain preferred suppliers and prime integrators in the region until 2014."
Also, in this program-driven market, with 90% of anticipated revenues expected to derive from U.S. Federal Aviation Administration (FAA) programs, analysts said early participation in such projects will be a key factor of success in the region.
Source: Frost & Sullivan.